It might have made sense for Microsoft to buy Nokia's phone business and build hardware there -- in that case, Microsoft is coming from way behind in the market, and it only gathers about $15 (or so) for each copy of Windows Phone 7 that it sells. To create an Apple-like smartphone business that really moves Microsoft's revenue and profits, building hardware might be the only way to do it.

(That assumes of course that Microsoft WANTS an Apple-sized smartphone business -- it may simply be happy with a couple billion in annual revenue and more mobile sockets for products and services like Exchange corporate email, Office 365 cloud-based productivity, and Xbox Live.)

It might even have made sense for Microsoft to build a tablet based on a mobile OS, or a special all-new platform like Courier.

But building Windows 8 tablets is a completely different story:

Microsoft's Windows margins are fantastic. Windows, as pure software, is a great business -- once Microsoft has covered development costs, every additional sale is pure profit. Better yet, Microsoft has tiny distribution costs -- the PC makers distribute most copies of Windows preinstalled on new machines. This is why Windows has enjoyed 70% profit margins (or better) for years. Getting into hardware would blow those margins completely.

Microsoft doesn't do well with branded hardware. Zune. Kin. Wireless routers. (Which you probably don't even remember.) None were successful. The only success was the Xbox -- and that was after $7 billion or so in up-front investments. (Microsoft would have preferred just to provide software for that business too, but consoles don't work that way -- there's no hardware maker stupid enough to take huge losses on the front end with no way to make them up selling software and services later.)

Pissing off PC makers is a horrible idea. Apple might sell 50 million iPads over the next two years. But Microsoft will probably sell 800 million copies of Windows. And as previously mentioned, Microsoft doesn't have to do much to distribute them -- the PC makers take care of that. Why would Microsoft risk the greatest distribution channel ever by competing directly with them? This isn't like angering its PlaysForSure digital media partners by making the Zune -- those MP3 players were failures that earned almost no revenue. This is Microsoft's core business.

What Microsoft might be doing is working with Taiwanese manufacturers to create tablets that can then be white labeled by other parties, like telephone carriers.

That's what Microsoft did when it first entered the smartphone space with Windows Mobile back in the early 2000s -- the first Windows Mobile phone was the SPV branded by French telecom Orange, but was actually built by HTC (which also built the Compaq iPAQ Pocket PC, which ran an even earlier version of Microsoft's mobile operating system).